Spain's 2008 mortgage bill: Purchasing power peaked under Aznar

Purchasing power peaked under Aznar; the bill arrived in 2008

What is the point of breaking the purchasing power record if the money supporting it was borrowed? This doubt underpins a lawsuit that resurfaces whenever José María Aznar’s name is mentioned. Spain’s maximum purchasing power for employees was reached during his government, some argue. Others counter that the largest brick bubble in recent history was built alongside it. Aznar left La Moncloa in 2003. The crash came in 2008. All the litigation fits within that five-year gap.

Was maximum purchasing power truly reached during the Aznar era?

The short answer is that no one disputes there was money back then. The long answer is that they dispute where it came from. The argument defending the balance is basic accounting: high income, growing employment, soaring consumption. The counterargument is equally simple and concerns the origin of that money. The real estate bubble started, according to some participants, in the late nineties and burst in 2008, so the president who inherited the worst years of the collapse was not the one who laid the first stone. But neither was he the one who removed it.

From there, the narrative breaks depending on where the cut-off point is placed. Some place the start in Felipe González’s era, with the first privatizations of public companies and entry into NATO. Others fix it on the euro, which made credit cheaper. And others, more simply, on 2003, the year Aznar left and everything continued the same for five more years. No one claims authorship of the party.

Purchasing power built on credit

Bread today, hunger tomorrow summarizes one of the most repeated diagnoses. The idea: consumption in those years did not come from salaries, it came from loans. Living on clean credit cards was a common scene, according to those who trinc the economic press at the time. Mortgages up to the hilt, financed cars, everyone leveraged. The star indicator of the party, some joke, was the growth of large nightlife venues: proof that there was money, not that it was their own. A three-story business is not a macroeconomic data point; it is an anecdote used as a thermometer, and a thermometer measures temperature, not solvency.

Salaries: from the 'mileurista' to the bus driver

Quantifying how much was earned back then is where the conversation gets most tangled. The repeated figure is the mileurista: a thousand euros a month was, at the time, a pejorative term, an entry-level salary to be ashamed of, according to one participant’s account. A bus driver or an ironworker could easily earn between 1,800 and 2,200 euros monthly, that same intervention adds. Measuring the purchasing power of then requires, in any case, comparing it against a different cost of living.

What peine to savings banks after the burst?

Here the narrative stops being opinion and becomes chronology. The Banco de España intervened in Caja Castilla-La Mancha in March 2009, even before the word bailout was heard in Brussels. Then Cajasur, in 2010. Then Caja de Ahorros del Mediterráneo and Banco de Valencia, in 2011, plus Caja Madrid, later converted into Bankia. In September 2011, the nationalization of three other savings banks was valued at 4.751 billion euros. And below that was the prior guarantee: a loan of 100 billion euros to the intervened savings banks.

The figure that most bothers those who remember the fine print is that of the guarantee fund. The guarantee per account rose from 20,000 to 100,000 euros, which in practice turned the State into a guarantor of a business between a bank and an individual. When the time came to pay, there was no capacity to do anything else. The financial bailout is, of the entire file, what neither side wants to claim as their own.

Was it a bubble only in Spain?

No. There is broad agreement that cheap credit and real estate expansion were a Western phenomenon. The most repeated comparison is the United States, pointed to as a case of an equal or worse bubble, and several countries took years to recover their footing. The difference, the more technical observers note, was not the bubble, but the dependence: in Spain, bricks weighed more in the overall economy and therefore the hangover lasted longer. The kilometers of highways built in that era remain; the bill does too.

Labor force and pressure on salaries

This is the harshest part and deserves separation from the data. It is argued that the massive arrival of foreign workers during the expansion years served to push salaries down by creating direct competition for less skilled jobs. This is a thesis that circulates harshly in public debate. However, there is no figure in the material that quantifies that effect.

Aznar left in 2003 and the music stopped in 2008. Claiming credit for the toast and disappearing before the bill arrives is a strategy as old as the bubble itself. The bill, by the way, arrived punctually and in everyone’s name.